Shares of several global chipmakers, including NVIDIA Corporation (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), and ASML (NASDAQ: ASML), encountered significant market turbulence on Wednesday following reports of potential government actions that could impact the semiconductor sector.
ASML, which makes equipment to manufacture semiconductors, saw its shares plummet amidst speculation that the Biden administration might tighten restrictions on semiconductor equipment exports to China. This news overshadowed its strong second-quarter results, where net bookings jumped 24% year-over-year to 5.6 billion euros ($6.12 billion), beating analysts’ estimates.
Impact of Tighter Trade Curbs on Chip Firms
The White House is reportedly considering implementing the foreign direct product rule (FDPR), which could empower the U.S. to impose controls on products made outside the country using American technology inputs. These measures might target products from companies such as Netherlands-based ASML, potentially affecting its revenue heavily due to significant sales to China.
In a separate development, former President Donald Trump’s comments suggesting that Taiwan should financially contribute to its defense stirred concerns over geopolitical tensions impacting the semiconductor industry.
Taiwan leads the global semiconductor manufacturing sector through TSMC (NYSE: TSM), and on Wednesday, American depositary receipts (ADRs) of this chip manufacturing giant also saw a significant decline.
NVIDIA (NASDAQ: NVDA) Stock Reaction
NVDA stock plunged 6.62% on Wednesday, closing at $117.99, marking a 12.54% decrease for the week. The trading volume was 390,086,176 shares, lower than the average daily volume of 400.58 million.
